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1 University of South Florida Scholar Commons College of Business Publications College of Business Development industry cluster in Tampa Bay : an analysis performed by Center for Economic Development Research, College of Business Administration, University of South Florida University of South Florida. Center for Economic Development Research Follow this and additional works at: Part of the Business Commons Scholar Commons Citation University of South Florida. Center for Economic Development Research, "Development industry cluster in Tampa Bay : an analysis performed by Center for Economic Development Research, College of Business Administration, University of South Florida" (2002). College of Business Publications. Paper This Article is brought to you for free and open access by the College of Business at Scholar Commons. It has been accepted for inclusion in College of Business Publications by an authorized administrator of Scholar Commons. For more information, please contact scholarcommons@usf.edu.

2 Development Industry Cluster in Tampa Bay An Analysis Performed by CENTER FOR ECONOMIC DEVELOPMENT RESEARCH College of Business Administration 1101 Channelside Dr., 2 nd Floor N., Tampa, Florida Office: (813) or Fax: (813) May, 2002

3 Preface The Tampa Bay Regional Water Coalition is a trade association of land development, construction, building materials and related businesses. The Coalition commissioned the Center for Economic Development Research (CEDR), College of Business Administration, University of South Florida, to conduct a four-part study of the development industry cluster in Tampa Bay. This document is a final report of a four-part study. The purpose of the study is to analyze the development industry cluster in Tampa Bay to determine the levels of activity and potential alternatives for employment by workers in this industry should it be curtailed. CEDR provides information and conducts research on issues related to economic growth and development in the Nation, in the state of Florida, and particularly in the central Florida region. The Center serves the faculty, staff, and students of the College of Business Administration, the University, and individuals and organizations in the University s service area. CEDR s activities are designed to further the objectives of the University and specifically the objectives of the College of Business Administration. Robert Anderson, Dean, College of Business Administration (COBA), USF Kenneth Wieand, Director, Center for Economic Development Research (CEDR), COBA, USF Dennis G. Colie, Economist and Principal Investigator, CEDR, COBA, USF Alexander A. McPherson, Research Associate, CEDR, COBA, USF Carol Wallace, Information Technology Specialist, CEDR, COBA, USF

4 TABLE OF CONTENTS EXECUTIVE SUMMARY... II SECTION 1: INTRODUCTION... 1 SECTION 2: AN OPERATIONAL DEFINITION OF THE DEVELOPMENT INDUSTRY CLUSTER... 3 SECTION 3: BASELINE CONTRIBUTIONS OF THE PRIMARY INDUSTRIES... 9 SECTION 4: EMPLOYMENT STRUCTURE OF THE PRIMARY INDUSTRIES SECTION 5: ECONOMIC CONTRIBUTION OF THE DEVELOPMENT INDUSTRY CLUSTER SECTION 6: ECONOMIC IMPACTS OF A SLOWDOWN IN DEVELOPMENT APPENDIX A PRIMARY INDUSTRIES INCLUDE REAL ESTATE AGENTS AND MANAGERS APPENDIX B EMPLOYMENT STRUCTURE INCLUDING REAL ESTATE AGENTS AND MANAGERS APPENDIX C DIFFERENCE IN EMPLOYMENT BY OCCUPATION i

5 Executive Summary The purpose of this study is to examine the economic impacts, such as loss of jobs, on Tampa Bay s economy, if there were a sharp reduction of development activity in the region. We begin the study by defining the Development Industry cluster in Tampa Bay. We select potential primary industries and use the IMPLAN TM input-output economic model to measure the magnitude of clustering in the sense that the primary industries would tend to have the same supplierindustries. We conclude that the five construction major industry groups and a portion of the Real Estate sector form the primary industries of the Development Industry cluster by virtue of commonality of supplier industries. The five construction industry groups are 1) residential construction, 2) industrial / commercial construction, 3) utility construction, 4) highway construction and 5) construction of government facilities. The Real Estate industries included among the primary industries are Nonresidential Building Operators and Subdividers and Developers. These construction and real estate industries exhibit strong supplier-linkages with other industries in Tampa Bay to form the Development Industry cluster. The top five Tier 1 supplier industries or industry groups in the cluster are 1) engineering architectural services, 2) wholesale trade, 3) management and consulting services, 4) motor freight transport and warehousing and 5) other business services. Next, using the REMI TM economic policy-insight model, we estimate the baseline economic contributions of the primary industries of the Development Industry cluster. We find that over 156,000, or about 7.3%, of the jobs in Tampa Bay are in the primary industries of the cluster. And, the firms in these primary industries produce more than $16 billion annually or 10.25% of regional economic activity. We also use Covered Employment and Wages (ES-202) data for 2 nd quarter, 2001 (most recent available) to provide a jobs-based perspective of the primary industries of the Development Industry cluster in Tampa Bay. The data are organized by Standard Industrial Classification (SIC) codes. We find that the 2,537 Tampa Bay firms in the General Building Contractors (SIC 15) group employ 14,898 workers. The majority (78%) of these workers receives an annualized wage between $35,000 and $60,000. The 455 Tampa Bay firms in the Heavy Construction (SIC 16) group employ 13,224 workers. The majority (51%) of these workers receives an annualized wage between $35,000 and $60,000. The 6,463 firms in the Special Trade Contractors (SIC 17) group employ 58,852 workers. The majority (91%) of these workers receives annualized wages of less than $35,000. The 422 Tampa Bay firms in the Operators of Nonresidential Buildings (SIC 6512) industry and in the Land Subdividers & Developers (SIC 6552) industry employ 3,034 workers. Employers were paying annualized wages of less than $35,000 to 69% of these workers. By comparing 1999 ES-202 data with another source, the U.S. Commerce Department s 1999 (most recent available) Regional Economic Information System data series, we are able to conclude that approximately 29.6% of persons working in construction in Tampa Bay were sole proprietors. Sole proprietors are not included in ES-202 data. Assuming that the percentage has remained stable, we estimate that about 37,295 sole proprietors are working in construction in Tampa Bay in ii

6 We assess the economic contribution of the Development Industry cluster using the traditional counter-factual approach. With this approach, we use the REMI TM model to remove the actual output produced by the primary industries of the cluster. The model tabulates the direct effects of the removal of the primary economic activities as well as the ripple, or secondary, effects throughout the Tampa Bay economy. We find that the Development Industry cluster contributes approximately 275,500 jobs, or 12.9% of total employment, to the Tampa Bay region. As measured by output, the cluster contributes about $27 billion of economic activity, or 16.5% of total output, to the region. And, the cluster is responsible for the generation of approximately $10.6 billion of personal income, or 15.1% of labor and property income, for the workers and owners of capital in Tampa Bay. While the counter-factual approach provides a way to derive a valid assessment of the economic contribution of the Development Industry cluster, it does not portray a realistic scenario of a slowdown in regional development. The counter-factual approach simulates a complete cessation of the productive activities of the cluster s primary industries. This is unlikely. Even if development were proscribed in some areas, economic principle tells us that substitute activities, such as remodeling or expansion of existing facilities, would occur. Therefore, rather than simulating a complete cessation, we gauge the regional economy s expected response to a 20% slowdown in production by the primary industries of the Development Industry cluster. We measure the response by the aggregated primary and secondary impacts on employment, output and personal income. We estimate that the total impact on employment in the Tampa Bay region would be a loss of nearly 56,000 jobs or 2.6% of the employment base during the first year of a 20% slowdown. Five years after the start of the slowdown, Tampa Bay would still be 48,000 jobs below the baseline. We also estimate that the total impact on output in the Tampa Bay region would be a loss of nearly $5.5 billion of output or 3.3% of the output base during the first year of the slowdown. Five years later, annual output in Tampa Bay would still be almost $5.0 billion below the baseline. Additionally, the total impact on personal income would be a loss of over $2.2 billion or 3.2% of the personal income base during the first year. Five years after the start of the slowdown, annual personal income in Tampa Bay would still be almost 2.8% below the baseline. With the loss of nearly 56,000 jobs in the first year of the slowdown, Tampa Bay s labor force also shrinks. We anticipate that in the first year the labor force would decline by about 11,000 workers. Furthermore, a 20% slowdown would have a significant impact on economic migration into the Tampa Bay region. In the first year of a slowdown approximately 11,800 fewer economic migrants (15.9% less in-migrants) will move into the Tampa Bay region than previously anticipated. Non-economic migrants, such as retired persons (age 65 or older), will be little affected by the slowdown. Although, about 40,000 people out-migrate from Tampa Bay each year, this number will increase by only a few hundred people each year as a result of a slowdown. In the first year of the slowdown, we estimate that Tampa Bay s population would be about 11,950 persons less that if there were no slowdown. The reduction in population would almost entirely be due to a decline in the number of economic in-migrants. iii

7 Section 1: Introduction The land development, construction, building materials, and associated industries are an integral part of Tampa Bay s economy. As growth management issues continue to be publicly debated, these industries come under increasingly closer scrutiny. Officials often point out that growth seriously strains government s ability to supply the infrastructure needed to support more people and businesses in the region. Consequently, some have gone as far as to suggest a moratorium on new growth. While a moratorium, or slowdown, on new developments in the region can reduce the demand for public sector infrastructure, it could have a deleterious impact on the Tampa Bay economy. For instance, the construction industries in Tampa Bay currently employ about 5.9%, or 126,000, of the region s workers. Even a small reduction in development activity, say 10%, can be expected to lead to the loss of 12,600 construction jobs. The purpose of this study is to examine the economic impacts, such as a loss of jobs, on Tampa Bay s economy, if there were a sharp reduction of development activity in the region. We begin the study by defining the Development Industry cluster in Tampa Bay. We define the cluster by examining industries generally associated with development activity for commonality of supplier chains. We develop a picture of the cluster in terms of primary industries and supplier industries (indirect industries). The results of this analysis are reported In Section 2, An Operational Definition of the Development Industry Cluster. In Section 3, Baseline Contributions of the Primary Industries, we estimate the economic contributions of the primary industries of the Development Industry cluster. The principal measures of the baseline economic contributions are employment and output. These economic contributions provide the baseline from which we assess the economic contribution of the Development Industry cluster of Tampa Bay and the economic impacts of an interruption of development activity in the Tampa Bay region. In Section 4, Employment Structure of the Primary Industries, we use the Bureau of Labor Statistics Covered Employment and Wages data to provide a jobs-based perspective of the primary industries in the Development Industry cluster in Tampa Bay. We compile and report the number of employees, average annualized wages, and the number of rims for each industry. Next, we assess the economic contribution of the Development Industry cluster using the traditional counter-factual approach. With this approach, we use the REMI TM model to simulate removal of the baseline output produced by the primary industries of the cluster. The model tabulates the direct effects of the removal as well as the ripple, or secondary, effects throughout the Tampa Bay economy. Employment, output and personal income measure the economic contribution and are report in Section 5, Economic Contribution of the Development Industry Cluster. In Section 6, Economic Impacts of a Slowdown in Development, we gauge the regional economy s expected response to a 20% slowdown in production by the primary 1

8 industries of the Development Industry cluster in Tampa bay. As in Section 5, we aggregate the direct and secondary effects as measured by employment, output and personal income. Then we trace the impact of lost jobs by occupation, the impacts on the region s labor force and population. We show that a slowdown significantly affects economic migration into Tampa Bay. 2

9 Section 2: An Operational Definition of the Development Industry Cluster Bay. The purpose of this section is to describe the Development Industry cluster in Tampa Harvard economist, Michael Porter, in The Competitive Advantage of Nations (1990) and in On Competition (1998), develops a model in which competitive advantages are generated by the spatial concentration of firms in an industry as they interact with regional and national factors conducive to their profitability. As applied to a regional economy, Porter s model relates the growth of a regional industry to regional infrastructure, to the spatial proximity of upstream industries that supply inputs into the production process, and to the proximity of downstream customers who purchase the industry s products and services. 1 Porter calls the grouping of an industry along with its upstream suppliers and downstream customers an industry cluster. In order to develop a picture of the Development Industry cluster in Tampa Bay, we start with selected primary industries and use the IMPLAN Professional TM input-output model to identify the supplier chains (indirect industries) for the primary industries. The selected primary industries are listed below by Standard Industrial Classification (SIC) code or code groupings and their corresponding IMPLAN sector number. We call the consolidation of primary industries the Development Industry group. The Development Industry group consists of: IMPLAN sector 48 Residential Construction = parts of SICs 15 (general building contractors), 16 (heavy construction except buildings), and 17 (special trade contractors). IMPLAN sector 49 Industrial / Commercial Construction = parts of SICs 15, 16, and 17. IMPLAN sector 50 Utility Construction = parts of SICs 15, 16, and 17. IMPLAN sector 51 Highway Construction = parts of SICs 15, 16, and 17. IMPLAN sector 54 Construction of Government Facilities = parts of SICs 15, 16, and 17. IMPLAN sector 462 Real Estate = SIC 6500 which includes real estate operators and lessors, real estate agents and managers, title abstract offices, and subdividers and developers. To measure the magnitude of clustering, we introduce into the model a $1 million increase in the output of each primary industry. We then measure the consequent percentage increase (as a percent of the increased primary output) in other regional industries. The greater the percentage, the more economic activity there is between an indirect industry and the primary industries. To better organize the inter-industry relationships, three tiers are used. Tier 1 relationships occur when an indirect industry s output increases by more than 1% of the increase in primary output. A Tier 2 relationship is between 0.5% and 1%. Tier 3 fills out the one-page summary of inter-industry relationships. Because spatial concentration is also an element of the clustering phenomenon, we examine the effect of introducing increased output into the model using several regional impact groupings. The regional groupings used in this study are: 1) individually, each of the seven 1 Porter represents regional competitive advantage as a diamond, the four corners of which are made up of the competitive nature of the industry, the interaction of firms in the industry with suppliers, the interaction with informed domestic customers, and the traditional country-specific factor cost and supply conditions. 3

10 counties that make up Tampa Bay, 2) individually, each of the three metropolitan statistical areas that make up Tampa Bay, and 3) the Tampa Bay Region as a whole. We find 24 Tier 1 supplier-industries. The Tier 1 supplier-links to the primary industries, in order of frequency, are: Supplier-industry Frequency Engineering Architectural Services 73 Wholesale Trade (see note on page 6) 70 Management and Consulting Services 56 Motor Freight Transport and Warehousing 54 Other Business Services 2 48 Real Estate (see note on page 5) 37 Accounting, Auditing and Bookkeeping 22 Personnel Supply Services 17 Computer and Data Processing Services 11 Maintenance and Repair Residential 10 Maintenance and Repair Other Facilities 10 Services to Buildings 10 Communications except Radio and TV 7 Miscellaneous Retail 7 Automotive Dealers & Service Stations 6 Paving Mixtures and Blocks 6 Equipment Rental and Leasing 6 Asphalt Felts and Coatings 4 Banking 4 Refrigeration and Heating Equipment 3 Structural Wood Members not elsewhere considered 3 Electric Services 1 Dimension Stone 1 Veneer and Plywood 1 2 Credit Reporting and Collection, Direct Mail Advertising Services, Secretarial and Court Reporting, News Syndicates, and Business Services not elsewhere considered. 4

11 Table 2.1 Tier 1 Industries, Frequency by Location Hernando Hillsborough Manatee Pasco Pinellas Sarasota Polk County/ Sarasota- Tampa- Tampa County County County County County County Lakeland- Bradenton St.Petersburg Bay SIC IMPLAN Total Winter Haven MSA MSA Code Sector Description Frequency MSA Engineering- Architectural Services , Wholesale Trade Management and Consulting Services Motor Freight Transport and Warehousing 7320,31,38,83, Other Business Services Real Estate , Accounting- Auditing and Bookkeeping Personnel Supply Services Computer and Data Processing Services 55 Maintenance and Repair- Residential Maintenance and Repair Other Facilities Services To Buildings ,20,40, Communications- Except Radio and TV Miscellaneous Retail Automotive Dealers & Service Stations Paving Mixtures and Blocks Equipment Rental and Leasing Asphalt Felts and Coatings Banking Refrigeration and Heating Equipment Structural Wood Members- N.E.C Electric Services ,20 40 Dimension Stone ,6 139 Veneer and Plywood Source: This table was constructed by CEDR based on IMPLAN output tables, which are contained in this report. Use of Table: This table shows the frequency with which an industry is in Tier 1 in a particular location. For example, Engineering-Architectural Services is in Tier 1 in Hernando County 7 times. The maximum for a single industry in one location is eight, i.e. the six primary industries plus all "Construction Industries", plus "All Industries". See also the accompanying "Tier 1 Industries, Frequency by Industry". 5

12 Table 2.2 Tier 1 Industries, Frequency by Primary Industry Residential Commercial/ Utility Highway Government Average Real Average Construction Industrial Construction Construction Building Construction Estate All (Implan 48) Construction (Implan 50) (Implan 51) Construction (Implan 48, (Implan 462) Industries SIC IMPLAN Total (Implan 49) (Implan 54) 49, 50, 51, Code Sector Description Frequency and 54) Engineering- Architectural Services , Wholesale Trade Management and Consulting Services Motor Freight Transport and Warehousing ,31,38,83, Other Business Services Real Estate , Accounting- Auditing and Bookkeeping Personnel Supply Services Computer and Data Processing Services Maintenance and Repair- Residential Maintenance and Repair Other Facilities Services To Buildings ,20,40, Communications- Except Radio and TV Automotive Dealers & Service Stations Miscellaneous Retail Equipment Rental and Leasing Paving Mixtures and Blocks Banking Asphalt Felts and Coatings Refrigeration and Heating Equipment Structural Wood Members- N.E.C Electric Services ,20 40 Dimension Stone ,6 139 Veneer and Plywood Source: This table was constructed by CEDR based on IMPLAN output tables, which are contained in this report. Use of Table: This table shows the frequency with which an industry is in Tier 1 in a particular Sector. For example, Engineering- Architectural Services is in Tier 1 in the Residential Construction Sector 9 times. The maximum for a single industry in one Sector is ten, i.e. the seven counties of Tampa Bay, the Tampa-St. Petersburg MSA, the Sarasota-Bradenton MSA, and Tampa Bay. See also the accompanying "Tier 1 Industries, Frequency by Location". 6

13 Five of the six primary industries exhibit clustering in the sense that they tend to have the same supplier-industries. The Real Estate industry, however, appears to rely on a somewhat different set of suppliers than the other five, which are construction industries. This finding is likely due to the Standard Industrial Classification (SIC) definition of the Real Estate industry division to which the input-output model conforms. About one-half of the Real Estate industry division in Tampa Bay is comprised of Real Estate Agents and Managers, who presumably mostly deal with the resale of properties. Importantly, however, the Real Estate industry also includes Land Subdividers and Developers, who would be closely related to construction industries. The IMPLAN model does not allow the separation of the Real Estate industry division into its individual industry components for refined analysis. But, from the frequency table by primary industry, it can be seen that there are three Tier 1 supplier-industries, which are solely related to Real Estate. These three industries are 1) Maintenance and Repair Residential, 2) Maintenance and Repair Other Facilities, and 3) Services to Buildings. Also, the Residential Construction industry, the Utility Construction industry and Government Building Construction industry exhibit links with the Real Estate industry, while the Commercial / Industrial Construction industry and the Highway Construction industry do not exhibit a link with Real Estate. The findings further show that within the construction-industries grouping there are no supplier linkages between construction industries. In contrast, the Real Estate industry emerges as a Tier 1 industry, when the only primary industry considered is the Real Estate industry itself. This indicates intra-industry linkages within the classification of businesses called Real Estate. The following is a list of supplier links that appear at least once in Tier 2, but never appear in Tier 1: Automotive Repair and Services Miscellaneous Repair Shops Legal Services Building Material and Gardening Credit Agencies Wood Kitchen Cabinets General Merchandise Stores Insurance Carriers Landscape and Horticultural Services Water Transportation Millwork Industrial and Fluid Valves Glass and Glass Products except Containers Security and Commodity Brokers Sanitary Services and Steam Supply Commercial Printing Wood Preserving Reconstituted Wood Products 7

14 We conclude that the five construction major industry groups and a portion of the Real Estate sector form the primary industries of the Development Industry cluster by virtue of commonality of supplier industries. The Real Estate industries included among the primary industries are Nonresidential Building Operators (SIC 6512), Subdividers and Developers (SIC 6552), and possibly Real Estate Agents and Managers (SIC 6531). The Real Estate industries not included among the primary industries of the cluster are Tier 1 suppliers to the primary industries. Based on the input-output analysis, the Development Industry cluster in Tampa Bay is broadly defined to include the primary industries plus their Tier 1 and Tier 2 supplier-industries. Tables 2.1 and 2.2 show the frequency with which the Tier 1 industries emerge by location, i.e. regional grouping, and by primary industry, respectively. Because we use ten regional groupings (the Lakeland-Winter Have MSA is coincident with Polk County) and eight industry groupings, the maximum frequency a Tier 1 supplier-industry can achieve is 80. 8

15 Section 3: Baseline Contributions of the Primary Industries Using the REMI TM model, we estimate the economic contributions of the primary industries of the Development Industry cluster. These economic contributions provide a baseline from which we assess the economic impacts of the cluster. (Economic impacts are discussed later in this report.) Based on the results reported in Section 2 of this report, we define the primary industries of the Development Industry cluster to be: Construction Major Industry Group Residential Construction Industrial / Commercial Construction Utility Construction Highway Construction Construction of Government Facilities and two industries of the Real Estate Group Subdividers and Developers Nonresidential Building Operators. 3 We measure the baseline economic contributions of the primary industries within the cluster by employment, output, and personal income. 4 That is, the industries hire a number of workers (employment), who produce goods and services of value (output). 5 The value-added less indirect business taxes - from production is distributed among the workers and the owners of the capital that the workers use in the production process (personal income). Table 3.1 shows estimates of employment by location (place of work) from 2002 to Panel A shows total employment in each county and a summation of the counties employment for the Tampa Bay region. Panel B reflects employment by the construction major industry groups in each county and Tampa Bay. Panel C gives the percentage of total employment contributed by jobs in the construction industries for each location. 3 It is also possible that some activities of the Real Estate Agents and Managers industry are consistent with a primary industry of the Development Industry cluster. However, data are not available to quantify the applicable proportion of the Real Estate Agents and Managers industry that applies to the cluster. The tables in Appendix A describe the baseline for the primary industries of the cluster, if the Real Estate Agents and Managers industry were included in its entirety as a primary industry of the cluster. Including Real Estate Agents and Managers as a primary industry within the cluster does not materially effect the findings of this study. 4 Estimates of personal income are only available for the construction major industry group. 5 In this context, workers include both wage earning and salaried employees as well as sole proprietors under contract to a firm in one of the primary industries. Technically, output is equal to sales plus or minus an inventory adjustment. 9

16 Table 3.1 Development Industry Cluster REMI Baseline Primary Industries: Construction Major Industry Groups EMPLOYMENT Panel A Employment (000s) Total Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel B Construction Employment (000s) by Sector > Non-Manufacturing > Construction Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel C Construction Employment (% of Total) by Sector > Non-Manufacturing > Construction Hernando 7.90% 7.79% 7.68% 7.55% 7.43% 7.32% Hillsborough 5.31% 5.22% 5.13% 5.02% 4.93% 4.85% Manatee 5.18% 5.09% 5.00% 4.90% 4.80% 4.72% Pasco 8.67% 8.55% 8.43% 8.30% 8.17% 8.07% Pinellas 5.65% 5.55% 5.45% 5.34% 5.25% 5.17% Polk 6.38% 6.31% 6.24% 6.16% 6.08% 6.01% Sarasota 7.07% 6.97% 6.86% 6.74% 6.61% 6.51% Tampa Bay 5.91% 5.82% 5.72% 5.62% 5.51% 5.43% Almost six percent of the jobs in Tampa Bay are in the construction industries. Among the counties of Tampa Bay, the number of jobs in construction ranges from approximately 41,600 in Hillsborough County to 3,500 in Hernando County. Pasco County has the largest share of its employment (8.67% in 2002) in construction, while Manatee County has the smallest 10

17 percentage (5.18% in 2002) of its employment in construction. Barring an unforeseen economic shock, we expect construction jobs in Tampa Bay to slightly decline from about 126,200 in 2002 to 125,100 in Table 3.2 shows estimates of output by location from 2002 to Panel A shows total output in each county and a summation of the counties output for the Tampa Bay region. Panel B reflects output by the construction major industry groups in each county and Tampa Bay. Panel C gives the percentage of total output contributed by the construction industries for each location. Table 3.2 Development Industry Cluster REMI Baseline Primary Industries: Construction Major Industry Groups OUTPUT Panel A Output (Bil. 01$) Total Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel B Output (Bil. 01$) Construction Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel C Output (% of Total) Construction Hernando 11.38% 11.15% 10.92% 10.68% 10.49% 10.30% Hillsborough 6.38% 6.25% 6.10% 5.96% 5.84% 5.74% Manatee 6.28% 6.14% 6.00% 5.86% 5.74% 5.64% Pasco 11.88% 11.69% 11.47% 11.25% 11.06% 10.91% Pinellas 6.53% 6.36% 6.18% 6.00% 5.86% 5.74% Polk 7.41% 7.31% 7.18% 7.05% 6.94% 6.86% Sarasota 9.39% 9.22% 9.01% 8.81% 8.62% 8.46% Tampa Bay 7.12% 6.97% 6.80% 6.64% 6.50% 6.39% 11

18 Over seven percent of the Tampa Bay economy is generated by the economic activity of the construction industries. Among the counties of Tampa Bay, construction output ranges from approximately $3.9 billion in Hillsborough County to $305 million in Hernando County. The economies of Hernando County and Pasco County heavily depend on the construction industries as evidenced by their 11.38% and 11.88%, respectively, construction output to total output shares. While we expect construction jobs in Tampa Bay to gradually decline, construction output is expected to increase from about $11.67 billion in 2002 to $12.17 billion in 2007 (in constant 2001 $s). The anticipated decline in employment and contemporaneous rise is output is indicative of increasing productivity in the construction industries. Table 3.3 shows estimates of personal income originating in the construction industries by location from 2002 to Panel A shows total personal income originating in each county and a summation of the counties personal income for the Tampa Bay region. Panel B reflects personal income originating in the construction major industry groups in each county and Tampa Bay. Panel C gives the percentage of total personal income originating in the construction industries for each location. Over six percent of personal income originating in Tampa Bay is derived from the output of the construction industries. Among the counties of Tampa Bay, personal income from construction industries production ranges from $1.6 billion in Hillsborough County to $92 million in Hernando County. As a percentage of a county s total personal income, construction industries in Pasco County contribute the largest share (9.03%), closely followed by Hernando County (8.21%) and Sarasota County (8.06%). In Tampa Bay, personal income - measured in nominal dollars derived from the construction industries is expected to increase from about $4.4 billion in 2002 to $5.2 billion in This is an 18.2% increase over five years, indicating that personal income from construction would keep up with an average inflation rate of about 3.64% per annum. 12

19 Table 3.3 Development Industry Cluster REMI Baseline Primary Industries: Construction Major Industry Groups PERSONAL INCOME Panel A Personal Income (Bil. nominal) Total Labor & Property Income Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel B Personal Income (Bil. nominal) Total Labor & Property Income > Non-manufacturing > Construction Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel C Personal Income (% of Total) Total Labor & Property Income > Non-manufacturing > Construction Hernando 8.21% 8.04% 7.95% 7.79% 7.70% 7.54% Hillsborough 5.66% 5.56% 5.46% 5.35% 5.24% 5.15% Manatee 6.03% 5.93% 5.84% 5.72% 5.61% 5.52% Pasco 9.03% 8.92% 8.79% 8.65% 8.51% 8.41% Pinellas 5.68% 5.58% 5.47% 5.36% 5.25% 5.16% Polk 6.99% 6.93% 6.86% 6.77% 6.68% 6.61% Sarasota 8.06% 7.92% 7.78% 7.61% 7.46% 7.32% Tampa Bay 6.22% 6.12% 6.02% 5.90% 5.78% 5.69% Tables 3.4 and 3.5 show the baseline economic contributions of Subdividers and Developers (SIC 6552) and Nonresidential Building Operators (SIC 6512). We measure the contributions by employment and output. Consistent with available government data, the REMI TM model s results for employment and output are aggregated for major group 65, Real Estate. We apportioned the model s results to estimate the contributions of these two industries. We use information from the U.S. Census 13

20 Bureau s 1997 Economic Census to apportion output to our industries of interest. 6 The apportionment is made in accord with sales per employee in each of the industries of the major group. For example, sales per employee for Nonresidential Building Operators (SIC 6512) is $164,637 (92 $s), which is 19.37% of the total of sales per employee for all industries within the major group. Thus, we assign 19.37% of the REMI TM model s results for Real Estate output to Nonresidetial Building Operators. Similarly, sales per employee for Subdividers and Developers (SIC 6552) is $143,105 (92 $s) or 16.84% of the major group total. We then divide the apportioned output by sales per employee (01 $s) to calculate the number of employees needed to generate the apportioned level of output. Furthermore, the REMI TM model results for personal income are aggregated at the division level, i.e. Finance, Insurance, and Real Estate (FIRE). We were unable to make a reliable apportionment of personal income to our real estate industries of interest. Table 3.4 shows estimates of employment by location (place of work) from 2002 to Panel A shows total employment in each county and a summation of the counties employment for the Tampa Bay region. Panel B reflects employment by Subdividers and Developers (SIC 6552) and Nonresidential Building Operators (SIC 6512) in each county and Tampa Bay. These two real estate industries are part of the Development Industry cluster. Panel C gives the percentage of total employment contributed by jobs in the two real estate industries for each location. About 1.4 percent of the jobs in Tampa Bay are in the two aforementioned real estate industries. Among the counties of Tampa Bay, the number of jobs in these industries ranges from approximately 11,300 in Hillsborough County to 435 in Hernando County. Sarasota County has the largest share of its employment (1.67% in 2002) in these real estate industries, while Polk County has the smallest percentage (0.88% in 2002) of its employment in the industries. We expect jobs in the two industries in Tampa Bay to increase from about 30,200 in 2002 to 35,000 in The Economic Census is a full-blown census of U.S. business establishments and is carried out every 5 years (years ending in 2 and 7). Due to a disclosure problem, the information we use for apportionment the Comparative Statistics for Florida, which is taken from the 1997 census report, actually reflects 1992 data. 14

21 Table 3.4 Development Industry Cluster REMI Baseline Primary Industries: Subdividers and Developers (SIC 6552) and Nonresidential Building Operators (SIC 6512) EMPLOYMENT Panel A Employment (000s) Total Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel B Industry Employment (000s) by Sector > Non-Manufacturing > Real Estate > SICs 6552 & 6512 Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel C Industry Employment (% of Total) by Sector > Non-Manufacturing > Real Estate > SICs 6552 & 6512 Hernando 0.99% 1.01% 1.02% 1.04% 1.06% 1.08% Hillsborough 1.44% 1.47% 1.49% 1.51% 1.53% 1.55% Manatee 1.31% 1.33% 1.35% 1.37% 1.39% 1.41% Pasco 0.98% 1.00% 1.02% 1.03% 1.05% 1.07% Pinellas 1.64% 1.67% 1.70% 1.73% 1.75% 1.78% Polk 0.88% 0.89% 0.91% 0.92% 0.94% 0.96% Sarasota 1.67% 1.69% 1.71% 1.73% 1.76% 1.78% Tampa Bay 1.41% 1.44% 1.46% 1.48% 1.50% 1.52% Table 3.5 shows estimates of output by location from 2002 to Panel A shows total output in each county and a summation of the counties output for the Tampa Bay region. Panel B reflects output by Subdividers and Developers (SIC 6552) and Nonresidential Building 15

22 Operators (SIC 6512) in each county and Tampa Bay. Panel C gives the percentage of total output contributed by jobs in the two real estate industries for each location. Table 3.5 Development Industry Cluster REMI Baseline Primary Industries: Subdividers and Developers (SIC 6552) and Nonresidential Building Operators (SIC 6512) OUTPUT Panel A Output (Bil. 01$) Total Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel B Output (Bil. 01$) BY Real Estate > SICs 6552 & 6512 Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel C Output (% of Total) by Real Estate > SICs 6552 & 6512 Hernando 2.76% 2.76% 2.76% 2.77% 2.80% 2.81% Hillsborough 3.11% 3.11% 3.11% 3.12% 3.12% 3.12% Manatee 2.96% 2.96% 2.96% 2.96% 2.97% 2.97% Pasco 2.61% 2.61% 2.63% 2.64% 2.65% 2.67% Pinellas 3.52% 3.50% 3.49% 3.48% 3.48% 3.48% Polk 1.86% 1.86% 1.87% 1.88% 1.89% 1.90% Sarasota 4.11% 4.09% 4.09% 4.08% 4.08% 4.08% Tampa Bay 3.13% 3.12% 3.12% 3.12% 3.12% 3.13% Over three percent of the Tampa Bay economy is generated by the economic activity of the two aforementioned real estate industries. Among the counties of Tampa Bay, output by these two industries ranges from approximately $1.9 billion in Hillsborough County to $74 16

23 million in Hernando County. Over four percent of Sarasota County s economy depends on the activities of these two real estate industries. We expect output in these industries to gradually increase from about $5.13 billion in 2002 to $5.96 billion in 2007 (in constant 2001 $s). Tables 3.6 and 3.7 show the baseline contributions of the Development Industry cluster as measured by employment and output, respectively. Table 3.6 shows estimates of employment by location (place of work) from 2002 to Panel A shows total employment in each county and a summation of the counties employment for the Tampa Bay region. Panel B reflects employment in the primary industries of the Development Industry cluster in each county and Tampa Bay. Panel C gives the percentage of total employment contributed by jobs in the primary industries for each location. Over seven percent of the jobs in Tampa Bay are in the primary industries of the Development Industry cluster. Among the counties of Tampa Bay, the number of jobs in the primary industries ranges from approximately 52,900 in Hillsborough County to 3,900 in Hernando County. Pasco County has the largest share of its employment (9.65% in 2002) in the primary industries, while Manatee County has the smallest percentage (6.50% in 2002) of its employment in the cluster s primary industries. Absent an unforeseen and destabilizing economic shock, we expect jobs in Tampa Bay s primary development industries to gradually increase from about 156,400 to about 160,100 during the next five years. However, this increase in employment is expected at a lower rate than the overall Tampa Bay growth rate in employment, as indicated by the decline in the percentage of employment in the primary development industries from 7.33% in 2002 to 6.95% in Table 3.7 shows estimates of output by location from 2002 to Panel A shows total output in each county and a summation of the counties output for the Tampa Bay region. Panel B reflects output by the primary industries of the Development Industry cluster in each county and Tampa Bay. Panel C gives the percentage of total output contributed by the primary industries for each location. 17

24 Table 3.6 Development Industry Cluster REMI Baseline Primary Industries: Construction Major Industry Groups plus Subdividers and Developers (SIC 6552) and Nonresidential Building Operators (SIC 6512) EMPLOYMENT Panel A Employment (000s) Total Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel B Construction Employment (000s) by Sector > Non-Manufacturing > Construction Industry Employment (000s) by Sector > Non-Manufacturing > Real Estate > SICs 6552 & 6512 Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel C Construction Employment (% of Total) by Sector > Non-Manufacturing > Construction Industry Employment (% of Total) by Sector > Non-Manufacturing > Real Estate > SICs 6552 & 6512 Hernando 8.89% 8.80% 8.70% 8.59% 8.49% 8.40% Hillsborough 6.76% 6.69% 6.61% 6.53% 6.46% 6.40% Manatee 6.50% 6.42% 6.35% 6.27% 6.19% 6.13% Pasco 9.65% 9.55% 9.45% 9.33% 9.22% 9.14% Pinellas 7.29% 7.22% 7.15% 7.07% 7.00% 6.95% Polk 7.26% 7.21% 7.15% 7.08% 7.02% 6.97% Sarasota 8.74% 8.66% 8.58% 8.47% 8.37% 8.29% Tampa Bay 7.33% 7.26% 7.18% 7.09% 7.02% 6.95% 18

25 Table 3.7 Development Industry Cluster REMI Baseline Primary Industries: Construction Major Industry Groups plus Subdividers and Developers (SIC 6552) and Nonresidential Building Operators (SIC 6512) OUTPUT Panel A Output (Bil. 01$) Total Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel B Output (Bil. 01$) Construction Output (Bil. 01$) by Real Estate > SICs 6552 & 6512 Hernando Hillsborough Manatee Pasco Pinellas Polk Sarasota Tampa Bay Panel C Output (% of Total) Construction Output (% of Total) by Real Estate > SICs 6552 & 6512 Hernando 14.14% 13.91% 13.68% 13.45% 13.28% 13.11% Hillsborough 9.49% 9.36% 9.21% 9.07% 8.96% 8.86% Manatee 9.24% 9.10% 8.96% 8.82% 8.71% 8.61% Pasco 14.48% 14.30% 14.09% 13.89% 13.71% 13.58% Pinellas 10.05% 9.86% 9.67% 9.49% 9.34% 9.21% Polk 9.27% 9.17% 9.05% 8.93% 8.83% 8.76% Sarasota 13.50% 13.32% 13.10% 12.89% 12.70% 12.54% Tampa Bay 10.25% 10.09% 9.92% 9.76% 9.63% 9.51% Over ten percent of the Tampa Bay economy is generated by the economic activity of the primary industries of the Development Industry cluster. Among the counties of Tampa Bay, the primary industries output ranges from approximately $5.9 billion in Hillsborough County to $379 million in Hernando County. The economies of Hernando County and Pasco County 19

26 heavily depend on the primary industries of the Development Industry cluster as evidenced by their 14.14% and 14.48%, respectively, industry output to total output shares. The primary industries output is expected to increase from about $16.8 billion in 2002 to $18.1 billion in 2007 (in constant 2001 $s). Steady employment and a contemporaneous rise in output is indicative of increasing productivity in the primary industries of the Development Industry cluster. 20